Gazprom and BASF sign 'historic' gas cooperation
11 April 2005, HANOVER - Russian energy giant Gazprom and German chemical concern BASF signed on Monday what they called "historic" and "trailblazing" documents for developing a new western Siberian natural gas field and transporting the gas to European markets.
11 April 2005
HANOVER - Russian energy giant Gazprom and German chemical concern BASF signed on Monday what they called "historic" and "trailblazing" documents for developing a new western Siberian natural gas field and transporting the gas to European markets.
BASF chief executive Juergen Hambrecht and Gazprom chairman Alexei Miller told a press conference at the Hanover Fair, where the documents were signed, that the envisaged cooperation will deepen the two companies' ties while securing Europe's future energy needs.
"We are stepping up existing successful cooperation with Gazprom in the production, transport and marketing of natural gas and our partnership now extends along the entire length of the value creation chain, from the well in Siberia through to the customer in Europe," said Hambrecht.
He put the rough value of the envisaged projects at USD 3 billion (EUR 2.31 billion). This would include some USD 2 billion (EUR 1.54 billion) for the new North European Gas Pipeline (NEGP) in the Baltic Sea and around USD 1 billion (EUR 0.77 billion) in developing the Yushno Ruskoya gas field.
"Today we signed documents of historic importance," Miller said. The Yushno Ruskoya field was specially chosen for the cooperation in what he said would be a "trailblazing project", with work to get started in the fall of this year.
The Gazprom-BASF documents cover three accords. In the first, Gazprom's share in the Wingas joint venture with BASF's energy subsidiary Wintershall will be boosted from the current 35 percent to 50 percent minus one share.
The second agreement covers the exploration of the Yushno Ruskoya field in western Siberia for a volume of at least 500 billion cubic metres of gas.
In the third accord, BASF and Gazprom are to set up a joint venture for the NEGP pipeline project, with BASF's share to be 50 percent minus one share.
Miller said the gas production accord represents a "new type of quality" in the 15-year cooperation between BASF and Gazprom.
The two executives noted the historical importance of the gas production agreement in that it is the first time that a foreign company is being granted the right to invest directly and produce gas from a Russian field.
Hambrecht and Miller said other companies would be welcome to join in the gas pipeline project, but said that BASF and Gazprom had the necessary means for carrying out the project on their own without outside assistance.
The Gazprom chief executive said the agreement would "strengthen the safety and stability of gas supplies to Germany and Europe", with the main markets expected to be the countries of northern Europe.
The signing agreement was witnessed by the two countries' top leaders, Chancellor Gerhard Schroeder and Russian President Vladimir Putin. Russia is the official 'Partnerland' country at the 2005 Hanover Fair.
Putin defended his country's huge oil and gas exports to Germany against criticism of Berlin conservatives, insisting that energy was the basis for a new interdependence between both nations.
"Without a doubt: this has stabilised the energy delivery situation in Europe and the world," said Putin at a joint news briefing with Schroeder.
Russia supplies about 47 percent of Germany's natural gas and the amount is likely to increase if a planned Baltic Sea gas pipeline is built running from Russia under water direct to Germany.
Moscow is also Germany's biggest single oil supplier delivering 34 percent of the country's annual crude needs. Germany's number two supplier is Norway with 20 percent followed by Libya and Britain each with 12 percent.
Putin called the Gazprom-BASF agreement "a transition to a new quality of ties - it basically means interdependency in energy relations".
But opposition leaders in Germany are raising alarm over Berlin's energy dependence on Moscow.
Friedbert Pflueger, the Christian Democratic alliance (CDU/CSU) foreign policy spokesman, says German energy security is at risk and warns that Russia traditionally uses energy "as a potential means of putting pressure on dependent states".
Schroeder defended the close energy ties with Moscow by noting that in contrast to many other oil and gas producers in the world Russia was a "stable and reliable partner."
In other business, Putin and Schroeder looked on while a EUR 1.5 billion deal was signed between Germany's Siemens and Russia's state railways for delivery of 60 high-speed ICE trains to Russia.
Subject: German news